1 ASSIGNMENT INSTRUCTIONS Assessment Coursework Assessment code: 010 Academic Year: 2020/21 Trimester: 3 Module Title: Business Finance Module Code: MOD003319 Level: 4 Module Leader: Nidhi Gogia Weighting: 50% Word Limit: 2,500 This excludes bibliography and other items listed in rule 6.75 of the Academic Regulations: http://web.anglia.ac.uk/anet/academic/public/academic_regs.pdf Assessed Learning Outcomes 1-3 Submission Deadline: This assignment must be received by Monday 26th July at 14:00pm. 1 WRITING YOUR ASSIGNMENT: • This assignment must be completed individually. • You must use the Harvard referencing system. • Your work must indicate the number of words you have used. Written assignments must not exceed the specified maximum number of words. When a written assignment is marked, the excessive use of words beyond the word limit is reflected in the academic judgement of the piece of work which results in a lower mark being awarded for the piece of work (regulation 6.74). • Assignment submissions are to be made anonymously. Do not write your name anywhere on your work. • Write your student ID number at the top of every page. • Where the assignment comprises more than one task, all tasks must be submitted in a single document. • You must number all pages. SUBMITTING YOUR ASSIGNMENT: In order to achieve full marks, you must submit your work before the deadline. Work that is submitted late – up to five working days after the published submission deadline - will be accepted and marked. However, the element of the module’s assessment to which the work contributes will be capped with a maximum mark of 40%. Work cannot be submitted if the period of 5 working days after the deadline has passed (unless there is an approved extension). Failure to submit within the relevant period will mean that you have failed the assessment. Requests for short-term extensions will only be considered in the case of illness or other cause considered valid by the Director of Studies Team. Please contact
[email protected]. A request must normally be received and agreed by the Director of Studies Team in writing at least 24 hours prior to the deadline. See rules 6.64-6.73: http://web.anglia.ac.uk/anet/academic/public/academic_regs.pdf Mitigation: The deadline for submission of mitigation in relation to this assignment is no later than five working days after the submission date of this work. Please contact the Director of Studies Team -
[email protected]. See rules 6.112 – 6.141: http://web.anglia.ac.uk/anet/academic/public/academic_regs.pdf 1 Prepare a 2,500 word business report for your manager providing analysis and business advice following the requirements below. Presentation and format: Business report with a title page, contents page and clear structure. It must be written in an appropriate business tone with appropriate Harvard reference where necessary. Note no introduction is required. No marks will be awarded for an introduction. 5 marks PART 1: FINANCIAL RATIO ANALYSIS (40 Marks) Browns plc is a national supermarket chain selling food, clothes and household appliances with a 31 December year end. The finance director would like the management accountant to prepare some financial data and analysis to present to the board. He has provided the management accountant with extracts from the financial statements to assist him in his analysis. Extracts from the Statement of Profit or Loss for the year ended 31 December 2019 (with comparatives) 2019 2018 £m £m Revenue 20,510 17,835 Cost of sales (18,970) (16,835) Gross profit 1,540 1,000 Operating profit 650 530 Finance costs (200) (130) Extracts from the Statement of Financial Position as at 31 December 2018 (with comparatives) 2019 2018 £m £m Non-current assets 9,100 8,390 Inventories 850 1,000 Total current assets 1,570 1,610 Trade payables 2,100 2,280 Total current liabilities 2,920 2,650 Non-current liabilities 3,250 2,530 Equity 4,500 4,820 1 Ratios 2018 Gross profit margin 5.6% Operating profit margin 3.0% Current ratio 0.6 Quick ratio 0.23 Inventory holding period (days) 22 days Payables payment period (days) 49 days The finance director has also supplied the following information regarding events in the year ended 31 December 2019: 1) Online food home delivery increased by 25%. 2) The number of stores grew by 10% in the year. This was financed by longterm borrowings. 3) In the year ended 31 December 2019, 40% of customers purchased at least one clothing item during the year; whereas in the year ended 31 December 2018, only 20% of customers did. 4) A strong marketing campaign took place during the year. 5) The new strengthened Grocery Supplier Code of Practice came into force to improve grocery retailers’ treatment of suppliers in terms of fairer prices. Calculate the ratios below for the year ended 31 December 2019, stating whether each has improved or deteriorated and provide one possible reason for the movement in each ratio: • Gross profit margin • Operating profit margin • Current ratio • Quick ratio • Inventory holding period • Payables payment period (36 marks; 2 marks for each calculation and 4 marks for each explanation) Explain why it would not be as relevant to calculate receivables collection period in this example? (4 marks; holistic marking) PART 2 : Understanding Financial Information & Management of Cash: 55 Marks 2.1. What is meant by Profit and Cash flow and how they are different. (20 marks) 1 2.2.What is meant by Working Capital and, the meanings of Receivables, Inventory and Payables (10 marks) 2.3. How changes in Working Capital affect Cash flow (10 marks) 2.4 Analyse whether a traditional or alternative budgetary system is appropriate to all or any parts of the business in its planned future form (15 marks)